HSR: Newly Expanded 4(c) and 4(d) Requirements

The Premerger Notification Office of the Federal Trade Commission announced on November 28, 2016, that they were revoking previous informal advice regarding the scope of Items 4(c) and 4(d) of the HSR Form. In the past, the PNO has taken the position that documents that would otherwise be responsive to Items 4(c) and 4(d) but discuss only foreign markets would not have to be submitted. Effective November 28, filers may no longer exclude such documents.

The change in interpretation is likely not going to have any substantive effect on compliance. The FTC offers two examples, the first of which provides:

The transaction involves the acquisition of a manufacturer of Chemical X. A board presentation regarding the transaction discusses the location and capacity, including shares, of all manufacturers of Chemical X, none of which is located in the United States. Under the PNO’s current informal guidance, this document could be excluded from the filing, even though it may be highly relevant to an initial competitive analysis of the U.S. market for Chemical X.

The problem with the old rule, at least as it is described in this blog post, is that it assumed that one had to have a physical presence in the United States to sell product here. One could very well take the position that even though the manufacturers of Chemical X were not physically located in the United States, they could sell in or into the United States. The relevant geographic market (as opposed to the physical presence) in this situation would not be exclusively foreign. Under this view, the reporting person could not exclude the document.

I suspect that in practice only a handful of documents were excluded on the old basis. A prudent practitioner would have likely included them lest risk a bounce. As such, this post, which has gotten some press, will not make much of a difference in the vast majority of filings, and should not be the basis of any meaningful concern.

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